The Court’s Discretionary Power with Regard to Financial Restructuring According to Saudi Bankruptcy Law

Abstract

The judiciary plays a major role in completing the procedures through which distressed debtor can avoid bankruptcy. The court’s role concerning financial restructuring procedure is important for especially with regard to its discretion in these procedures, as well as accepting the initiation of the financial restructuring and the appointment of a trustee, expert and receiver, ratification of the financial restructuring, and processing its procedures and the consequences thereof. Findings: The Saudi legislature granted the court discretionary power to decide whether to terminate the financial restructuring procedure or to cease the debtor to manage its funds at the request of the trustee. Likewise, the legislature allowed the court in the event of a ruling to cease the debtor to decide between two options: To assign a bankruptcy trustee to manage the debtor’s activity and funds and to assume all its powers and responsibilities stipulated by law, or to appoint a person other than a trustee to replace the distressed debtor in the management who shall have all the creditor’s powers and responsibilities as the court deems appropriate. Recommendations: According to its discretionary power, the court should consider selecting trustees for financial restructuring procedures.